Coinbase today started trading in two new institutional-sized Bitcoin and Ether futures contracts as part of its new institutional futures offering: a move driven by investor demand for advanced derivatives products following the successful launch of its nano contracts in August 2022.
The new contracts, which are accessible through third-party brokers and futures commission merchants (FCMs), were launched on 5 June on the CFTC-regulated Coinbase Derivatives Exchange in the US. According to the exchange, they will “enable investors to precisely manage risk and target attractive returns, with lower fees than other US-regulated exchanges”.
“With the launch of these institutional-sized USD-settled contracts, we look to empower institutional participants with greater precision in managing crypto exposure, expressing directional views, or tracking Bitcoin and Ether returns in a capital-efficient way,” said the exchange.
The BTI and ETH futures, sized at BTC1 (US$26,731.96 as of 5 June, according to Coinbase data) and ETH10 (US$18,679.65) per contract, respectively, are designed to help institutional investors to tailor their exposure to these growing digital asset commodities with granularity, allowing traders to seize opportunities in a highly dynamic market environment.
In addition to risk management and enhanced precision, the institutional-sized contracts come with significantly lower fees than traditional offerings. Early institutional adopters could also qualify for various inventive programs in return for trading the new contracts.
Coinbase has made a strong institutional play in recent years, not least with the launch of Coinbase Prime, its institutional investment platform, back in September 2021. The platform has made a couple of high-profile moves since then, including a partnership with BlackRock in August 2022 to give Aladdin users access to its trading, custody, prime brokerage and reporting services (starting with Bitcoin). The same year it connected with Alan Howard-backed One River, while earlier this year Coinbase Prime teamed up with institutional crypto platform Talos to give users access to spot liquidity and custody services.
In March 2023, Coinbase acquired One River Digital Asset Management (a subsidiary of One River), in a further bid to bridge the gap between institutions and the crypto-economy. The new entity will operate as Coinbase Asset Management, operating independently.
In May this year, Coinbase also launched Coinbase International Exchange, offering Bitcoin and Ethereum perpetual futures to the global derivatives market, following the approval of its regulatory license from the Bermuda Monetary Authority (BMA), which allows it to operate in non-US jurisdictions.
Perpetual futures accounted for nearly 75% of global crypto trading volume in 2022.
©Markets Media Europe 2023
